Saudi Arabia has enacted a new investment law to attract foreign capital on Tuesday, reducing taxation and allowing 100 percent foreign ownership of companies.

The Saudi Press Agency said that King Fahd approved through a royal decree the law on Monday following adopting by the Shura consultative council last month.

The 18-article law, called "The Foreign Investment System" was endorsed by the cabinet at its meeting held in Monday.

Foreign ownership in the kingdom had been limited to 49 percent but will now be boosted to 100 percent for industrial projects. Foreign entrepreneurs will no longer have to seek out a Saudi associate, according to AFP.

The law was drawn up by the Supreme Economic Council (SEC), an institution chaired by Crown Prince Abdullah bin Abdelaziz, as part of efforts to bolster local and external investments to reduce Saudi Arabia's dependency on oil.

Industry and Electricity Minister Hashem bin Abdullah al-Yamani told SPA the law would "make the investment climate more healthy and attract increasing amounts" of capital.

The aim was to "remove obstacles" and "ease the bureaucracy" which made investment complicated in the oil-rich kingdom, he said.

He added that the State would "cover 15 per of tax on company profits exceeding 100,000 riyals (26,000 dollars) a year."

The Supreme Economic Council was established in August 1999 by King Fahd to accelerate the pace of economic reform. It gathers together in one body ministers holding the national finance and economy, oil, trade, industry, planning and labor portfolios - (Several Sources)